Doing the Right Thing in the Wrong Way
It was argued in the last chapter that a substantial increase in the American price of gold would be essential in order to ensure a satisfactory operation of the Bretton Woods system. As things appear at the time of writing, however, the chances of a major devaluation of the dollar are extremely remote. The overwhelming majority of American expert opinion, political opinion and public opinion is firmly against it. The maintenance of the official price of gold at $35 has come to be regarded as a matter of national honour and prestige. This in spite of the fact that the older generation still remember the increase in the price of gold from $20.19 to $35 in 1934. Nobody has ever held that devaluation against the American nation or against the Roosevelt administration. In fact the dollar came to command infinitely higher prestige immediately after its devaluation and during most of the time ever since than it had before its devaluation.
KeywordsMonetary Policy Equilibrium Level Official Price Floating System Bretton Wood System
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